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Hedge Funds Going Back and Forth On Enel Chile S.A. (ENIC)

In this article you are going to find out whether hedge funds think Enel Chile S.A. (NYSE:ENIC) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Enel Chile S.A. (NYSE:ENIC) was in 8 hedge funds’ portfolios at the end of the first quarter of 2020. ENIC investors should be aware of an increase in hedge fund sentiment in recent months. There were 6 hedge funds in our database with ENIC holdings at the end of the previous quarter. Our calculations also showed that ENIC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the new hedge fund action surrounding Enel Chile S.A. (NYSE:ENIC).

How have hedgies been trading Enel Chile S.A. (NYSE:ENIC)?

Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in ENIC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the biggest position in Enel Chile S.A. (NYSE:ENIC). Renaissance Technologies has a $6.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Cliff Asness of AQR Capital Management, with a $6.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism comprise Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position AQR Capital Management allocated the biggest weight to Enel Chile S.A. (NYSE:ENIC), around 0.01% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to ENIC.

As aggregate interest increased, some big names have jumped into Enel Chile S.A. (NYSE:ENIC) headfirst. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in Enel Chile S.A. (NYSE:ENIC). Citadel Investment Group had $0.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $0.5 million investment in the stock during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Enel Chile S.A. (NYSE:ENIC) but similarly valued. We will take a look at Forty Seven, Inc. (NASDAQ:FTSV), Sensata Technologies Holding plc (NYSE:ST), Prosperity Bancshares, Inc. (NYSE:PB), and Owl Rock Capital Corporation (NYSE:ORCC). This group of stocks’ market values are similar to ENIC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FTSV 40 1084502 22
ST 26 699556 3
PB 16 81448 -6
ORCC 11 118961 3
Average 23.25 496117 5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $496 million. That figure was $18 million in ENIC’s case. Forty Seven, Inc. (NASDAQ:FTSV) is the most popular stock in this table. On the other hand Owl Rock Capital Corporation (NYSE:ORCC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Enel Chile S.A. (NYSE:ENIC) is even less popular than ORCC. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on ENIC, though not to the same extent, as the stock returned 23.2% during the second quarter (through June 17th) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.